CreditFactors

The extremely important Experian STATUS and DELETION dates

2 | October 22nd, 2008 | Posted in Experian MISSING date of first delinqueny / charge-off

(click on image for full size)

When was this account charged off?

How does a CREDITOR know how to rate this account?

How does Experian determine when the account is to be deleted?

How do FICO scores rate the account?

Since Fair Isaac does NOT provide the DETAILS for the scores such as how many months ago an account was delinquent, I cannot prove how the account is rated.

Experian should be ORDERED to provide the dates of the charge-off to creditors and the date of first permanent delinquency to creditors. I’ve SUED Experian over this and the deposition is at CreditCourt. That’s the case I had to dismiss because they filed my totally unredacted credit reports on PACER for ANYONE to download.

To all you credit experts:

Can you tell me when this account was charged off or when the account first became permanent delinquent?

Can you tell me whether the scheduled deletion date is CORRECT?

I’ll try to post how Fair Isaac reports the account soon.

White v. Experian et al: CRAs must update SOME discharged accounts after bankruptcy filing

6 | October 14th, 2008 | Posted in After bankruptcy reporting

The 8/19/08 stipulated order pertains to several class action against all three CRAs.

DRAFT: I will edit this entry after I read the order again or get some feedback from attorneys. I am NOT an attorney (updated 10/14/08 11:03 am)

The lead case is Terri N. White, et al. v. Experian Information Solutions, Inc. Case No. SA CV 05-1070.

The 8/19/08 order.

The credit bureaus routinely failed to correctly report discharged accounts as included in bankruptcy and the order addresses some, but unfortunately not all problems with after bankruptcy reporting.

It shows that the plaintiffs’ attorneys don’t know anything about FICO scores and they missed the opportunity to make this a truly comprehensive order. Of course that’s good for you, the credit professional, as it means that most after bankruptcy reports will benefit from an expert’s review.

The highlights of the order:

1) CRAs have to report many, but not all derogatory tradelines, collections and judgments as included in bankruptcy within 60 days of reporting the bankruptcy filing.

The CRAs had until October 1, 2008 to scrub all credit files to ensure that most dischargeable closed derogatory accounts with major derogatories (as defined) and opened before the bankruptcy discharge are reported as included in bankruptcy, with NO balances and NO new lates payments.

2) CRAs cannot update certain dates such as the EXTREMELY important Experian status date.

This was one of my claims against Experian in my first federal suit. Unfortunately, I had to dismiss my entire case in exchange for the removal of my entirely unredacted credit reports from PACER, where anyone could download my reports for 8 cents/page. [My petition for rehearing / en banc re. Experian filing my unredacted credit reports]

I do NOT understand why Experian is allowed report the status date as a month AFTER the discharge date. Lawyers on drugs???

3) Consumers retain the right to dispute accounts incorrectly reported as discharged.

It is most important for FICO scores to have OLD positive accounts and established OPEN accounts. Unfortunately, the CRAs have repeatedly REFUSED to remove the bankruptcy notations from mortgages and auto loans that were actually paid as agreed and NOT discharged. The FICO scores can easily be lowered over 50 points by incorrect bankruptcy reporting. In this order, the credit bureaus acknowledge that they know that incorrect bk reporting can be detrimental.

4) They FAILED to address the Trans Union Date Closed.

Capital One is notorious for removing the date closed for discharged accounts or using a much more recent date closed. The difference in FICO scores can exceed 80 points.

5) Incomplete reporting is EXPLICITELY allowed.

They explicitly ALLOW incomplete reporting of accounts without the date opened.

6) NO liquidated damages for violations of the order.

If they were SERIOUS about accurate reporting, we would have a clause with liquidated damages for failing to comply with the order. After my preliminary analysis of the order, the primary benefit seems to be for lawyers in future litigation.

7) Implementation

September 1, 2008 with possible extensions to March 31, 2009. I don’t know yet what the status is, have to check the docket.

CONCLUSION

There’s nothing exciting about this much hyped stipulated order other than to establish the POSSIBILITIES for accurate reports due to software automation. There are SO many incorrectly reported accounts that could be automatically corrected or rejected by software.

Quite likely MANY accounts that were NOT discharged will be reported as discharged.

With so much more important incorrect reporting, it looks like this is a HUGE money maker for the plaintiffs’ attorneys who apparently don’t care about COMPLETE and ACCURATE reporting. I question the ethics and/or competence of the attorneys. Considering the NUMBER of attorneys involved, this is truly disappointing.

Consumers will still have to spend $50/person on myFICO credit reports after the discharge.

Consumers can wait 60 days after the discharge before ordering myFICO reports. However, it is quite likely that disputes will need to be submitted anyway.

I also expect the CRAs’ software to IMMEDIATELY correct discharged accounts when the bk discharge public record is reported. There is absolutely no need to delay 60 days as it is done automatically by software. But it’s possible that they’ll program the software to wait 60 days to ensure maximum inaccuracy as long as possible.

As always, ANALYZE the FICO score factors.

Don’t waste your clients’ money on frivolous disputes. It’s important to have the accounts reported as discharged and to have the correct DATES. Do NOT dispute accurate derogatory data or other irrelevant derogatory notations such as the charge-off status.

Consumers are experts at submitting frivolous disputes themselves and if all the IMPORTANT data is accurate, they can start disputing in hopes of getting the accidental deletions.

Make sure that your clients understand that deletions of discharged accounts may result in LOWER scores.

Sometimes those frivolous disputes backfire, causing accounts only on one report to be reported to all three CRAs or causing score lowering changes in the reporting. I always annotate the clients’ derogatory accounts NOT to dispute because deletion would likely lower scores and I usually do NOT recommend frivolous disputes. After all, it is quite likely that a credit bureau will revert to incorrect reporting, then refuses to correct and that a lawsuit has to be filed. It is NOT helpful to have CRAs produce the frivolous disputes.

Definitions and highlights from the 36-page order:

FCRA Section 623(a) violations do NOT result in legal claims for consumers

0 | September 24th, 2008 | Posted in Remove FCRA requirements consumers can not sue for

A CreditFactors subscriber had been disputing with HSBC directly after reading about the “623 method” on the web. It took a while to get the point across that many provisions of the FCRA are totally useless.

Unfortunately, there is lots of misinformation on the web about NEW RIGHTS under the 2003 FCRA amendment (FACT Act) and many credit sites recommend disputing with creditors directly.

Many credit repair companies also send frivolous disputes directly to CREDITORS. Of course the credit repair mills don’t send disputes with the intent to sue because the disputes are frivolous and they try to delay corrections so that their clients continue to pay longer.

However, if you are a credit professional, you are NOT sending frivolous disputes and you should know the basics about establishing legal claims for your clients.

From the FCRA:

§ 623. Responsibilities of furnishers of information to consumer reporting agencies [15 U.S.C. § 1681s-2]

(c) Limitation on liability. Except as provided in section 621(c)(1)(B), sections 616 and 617 do not apply to any violation of–

(1) subsection (a) of this section, including any regulations issued thereunder;

Section 623 (a) contains the touted new requirements for data furnishers, section 621 is “Administrative enforcement” and sections 616 and 617 are the sections giving consumers the right to sue.

Data furnishers have absolutely NO liability to consumers for failing to comply with section 623(a) requirements.

And that explains why creditors couldn’t possibly care less about compliance.

ONLY regulators can enforce section 623 (a) compliance.

Have the client mail disputes to a creditor directly if also disputing with the CRAs and the client is going to sue if the reporting is not corrected. In other words, dispute with the creditor directly if it’s important. Since the CRAs often don’t provide the actual disputes submitted by consumers to the creditors, COMPLETE and FACTUAL disputes with creditors IN ADDITION to the CRA disputes might result in larger punitive damages or settlements.

Do NOT send letters to creditors because of “rights” under FCRA 623(a) as consumers have NO legal rights after violations.

It especially unprofessional to demand “validation” of debts from creditors and makes the client look bad.

If it’s NOT the client’s account, have him/her send a notarized fraud affidavit. Demanding validation indicates that the client is a liar.

The 2003 FACT Act weakened the FCRA and added countless pages of ludicrous and bizarre requirements to confuse consumers and even lawyers.

It makes it easy for credit bureaus and creditors to get lawsuits dismissed because consumers don’t have the right to sue for most violations.

While the regulators COULD enforce consumer legislation, they refuse to do so. So let’s just get rid of all that harmful fluff and stick to laws that mean something.

Credit bureaus and Sallie Mae REFUSE to correct student loan high credit reporting

0 | September 16th, 2008 | Posted in Student loan balances higher than high credit

Every month the balances on deferred student loans increase as the deferred interest is added, but the “high credit”, “original balance”, “highest amount owed” or whatever label is on the credit reports is NOT increased.

Obviously, it’s NOT good for credit scores to have installment loan balances higher than the original loan amounts and FICO scoring software does NOT exclude from the installment balance/limit ratio the student loans with the notation indicating that the loan is in deferment.

When consumers dispute, the credit bureaus update with the new increased balance, but they do NOT update the “high credit”, the most owed.

The Experian negative score factor:

The remaining balance on your non-mortgage installment loans is too high.

FICO scoring software determines that you are a poor credit risk because you’re owing more on your non-mortgage installment loans than when you got the loans.

Current balance / high credit = percentage of amount still owed.

In this case:

$8,779 / $6,000 = 146%

Several clients disputed TWICE and TWICE all three credit bureaus FAILED TO CORRECT!

The first dispute of the Sallie Mae student loans to Equifax:

2) Sallie Mae [account # redacted] and [account # redacted] - Please correct the High Credit. It can not possibly be LOWER than the current balance.

Equifax VERIFIED with the incorrect reporting.

The 8/18/08 2nd dispute :

2) You VERIFIED the OBVIOUSLY incorrect reporting of the Sallie Mae student loans with the High Credit LOWER than the current Balance. Please advise Sallie Mae to correct the reporting and to ensure that ALL student loans are reported correctly as FICO scores are lowered by this practice.

The 9/9/08 Equifax investigation results:

HUH?

(Click on picture for larger view)

These two Equifax screenshots are from the SAME investigation results.

This is a TYPICAL example of communications with credit bureaus.

When a client disputed with Sallie Mae directly, it responded that it was reporting accurately and it failed to correct the credit reporting.

Finally: the accounts

0 | September 13th, 2008 | Posted in Analyzing myFICO reports 101

The account listing

This listing is very helpful on reports with many accounts. You can quickly see the balances, open dates, status and the dreaded little red flags indicating that the account was delinquent.

MISSING are the credit limits and high credit and whether/when the accounts were closed.

Credit analyzing software should include this data, drop the account number and instead of a “yes/no” for lates, include the DATE of the last late.

And of course one should be able to sort by clicking on the field name, as is standard for many programs.

Account details

Here’s the beef:

While there is MORE information on the credit bureau direct report, this is the information utilized in the FICO scores.

The student loans are INCORRECTLY reported as “unrated or bankruptcy” and SHOULD be reported as “paid as agreed.”

Because these are the ONLY accounts, the “unrated or bankruptcy” is devastating.

I’ll explain why once we got through this report.

Consumer statements on credit reports are IGNORED by most creditors

0 | September 12th, 2008 | Posted in Proposed Legislative Changes, REMOVE consumer statements from credit reports

The FCRA allows consumers to add an up to 100-word statement after the credit bureaus refused to correct / delete accounts as per the consumers disputes.

The credit bureaus encourage consumers to submit these statements in their investigation results, but they do NOT disclose that just about no creditor reviews the credit reports because they are using credit scores and the “magic number” determines decline, approval and terms of credit offered.

FICO scores IGNORE consumer statements.

Since credit scores do NOT rate these statements and almost all creditors use credit scores, adding a consumer statement to the credit report is a complete waste of time.

It’s a lot like demonstrating at a political convention. The protesters have to remain in a “free speech” zone where nobody hears and sees them. Similarly, these “statements” are your right to free speech on your credit report, cleverly designed to be ignored. You’re wasting your time and resources.

Additionally, there can be negative side effects.

The late payments you’re apologizing for might drop off and the statement remains. It could be embarrassing and/or could cost you an apartment or job.

Now if we could only get Congress to get a clue and realize that credit scores don’t rate statements and REMOVE this fake and completely useless consumer “right”.

Credit At-A-Glance

0 | September 12th, 2008 | Posted in Analyzing myFICO reports 101

Personal Information

Personal data is NOT included in FICO scores.

While it’s not necessary to ensure the accuracy of personal data, I take a quick look when working with new clients. Usually I don’t know where my clients live, where they work and how old that are. It helps me communicate with my clients and STATE law is important when it comes to collection issues and law suits.

The ADDRESS is very important.

When I draft disputes for clients, I check the CURRENT addresses on all 3 reports and about 1/3 of clients have a report with an incorrect current address. Usually, but not always, these are reports with no open accounts.

The credit bureaus will send investigation results to the address on the report and provide it to creditors for pre-approved credit offers.

A notice of CORRECT address has to be included with the credit bureau disputes and it’s also a good idea to include a copy of ID and a utility bill showing the new address.

Personally, I avoid providing information to credit bureaus. What does my drivers license number have to do with my credit? When TU refused my disputes in 2001 and demanded ID, I immediately sued. I didn’t ask them for a credit report, but for CORRECTION of my data. I had even included a copy of my TU credit report with my dispute. They should at least have started the investigation and could have sent a letter advising that I need to send ID before they’ll send me a new report.

It’s easier, cheaper and faster to just give them what they want, especially if they already have the info, such as your current drivers license number.

Credit bureaus also routinely refuse disputes and require ID even when the address is accurate and they recently sent investigation results to the same address. It’s one of many ways for the credit bureaus to discourage disputes.

There are measures consumers should take to protect their privacy.

Never give home phone numbers or permanent cell phone numbers to creditors. I recommend using free virtual phone numbers and PO boxes or private mail boxes for all . Many millions of people will live a much more enjoyable life when they eventually default on their credit cards and have collectors hounding them.

Credit at-a-glance

Finally, some useful data. I might have a quick look before I get to the accounts, but it’s not very relevant until after I reviewed the accounts. If a reported mortgage doesn’t show up as mortgage in this table, there’s obviously a problem with the reporting.

Statements

I assume that this is the section for statements submitted by consumers to explain or dispute delinquent accounts after the credit bureaus refused to correct/delete.

FICO scores do NOT rate consumer statements.

That’s why it’s pointless to submit these up to 100-word statements the credit bureaus promote when they don’t correct their reporting.

Additionally, there can be negative side effects.

The late payments you’re apologizing for might drop off and the statement remains. It could be embarrassing and/or could cost you an apartment or job. If nothing else, you certainly look stupid.

Now if we could only get Congress to stop misleading consumers and to DELETE this fake and completely useless consumer “right”.

If you have something to say about incorrect reporting, say it to a judge.

The FCRA promotes these consumer statements to discourage lawsuits against creditors and credit bureaus. The goal is to mislead consumers, falsely implying that they can mitigate the adverse effect of false credit reporting. Only correction / deletion of the reporting will impact on the credit rating and that can best be accomplished with a lawsuit.

myFICO composition and score factors

0 | September 4th, 2008 | Posted in Analyzing myFICO reports 101

1) FICO score “ingredients.”

According to Fair Isaac:

Payment history
Amounts owed
Length of credit
New Credit
Types of credit

Please DO study this Fair Isaac page, it’s one of the few pages with excellent and ACCURATE information.

This is the data referred to at the top of the myFICO reports as FICO score “ingredients.”

Note that “types of credit” is NOT listed on the reports. That’s probably because the rating is rather unscientific or in other words, they’d get a lot of complaints about incorrect ratings.

I don’t pay much attention to this section until I’m ready to draft disputes and to make recommendations for new accounts, etc.

When the length of credit (account history) is NOT a score factor, this rating gives me a good idea how the FICO software rates the report. And since OLD accounts are often reported only on one or two reports, there may be a big difference between reports.

2) The FICO score factors

Here are the score factors as I posted them for my client:

Trans Union

Top Negative Factors

You have a collection on your credit report.

Number of collections on your credit report: 4 Collections

You have few accounts that are in good standing.

Number of your accounts currently paid as agreed 0 account

– the student loans are NOT rated

You have a short credit history

Your oldest account was 9 Months ago.
Average age of your accounts 9 Months ago

– the student loans still count, although unrated

There is no recent activity on your revolving accounts.

Your credit report shows no open revolving accounts [?] or it does not report recent information (such as balance or credit limit) about any of your revolving accounts. Your FICO score evaluates your mix of credit cards, installment loans and mortgages. People who demonstrate responsible use of different types of credit are generally less risky to lenders.

What’s helping your FICO score

You have no missed payments on your credit accounts.

Number of your accounts with a missed payment: 0

It’s a lot of work to copy/paste and format the score factors from the reports, the kind of task perfect for software. But you can’t improve credit scores without being able to QUICKLY review the score factors.

For followup reviews, I copy the initial factors and then update with the new factors. Each score has its own descriptive topic:

7/13/08 — TU — 569

I annotate the topic with important changes or problems.
On this report we only have two accounts, both unrated student loans. We also have 4 collections and it is a bit odd to see that the payment history is “very good” and the positive factor:

“Number of your accounts with a missed payment: 0 accounts.”

That’s why it’s SOMETIMES so important that collections are NOT incorrectly reported as tradelines.

The 8/8/08 TU myFICO score of 661 (still with 4 collections) documents that AU accounts are NOT entirely ignored in the new FICO 08 TU scoring formula.

But first I’ll post the unrated student loans in the next entry.

Analyzing myFICO reports 101

0 | September 4th, 2008 | Posted in Analyzing myFICO reports 101

I changed my mind about posting on the TU “bk or unrated” accounts when I looked at the report.

Since few credit repairers have seen a myFICO report, I decided to start with going through the myFICO report and explaining what to IGNORE.

It’s a HUGE problem that the myFICO credit reports are full of bla bla bla …

Here’s the screenshot of the first part of a Trans Union myFICO report with many meaningless words:

Bla bla bla

As you can see, MOST of the text should be ignored:

Not much to read here

The next post will be about what exactly we are looking at.

Welcome to the new CreditFactors blog

0 | September 2nd, 2008 | Posted in General

I hadn’t done any major updates for my CreditFactors site since 2003. Now that I’m almost done, I know why:

It’s a LOT of work!

I decided to move the site to a BLOG format and to focus on FICO scores, bugs, new discoveries, credit reporting and collection issues. With over 2000 posts, the CreditSuit.org blog searches yield too many results.

I might also add a section for problems that should be addressed by the legislature here. I’ve seen several collection white papers written by collection associations and attorneys, but I have not seen these issues addressed by any CONSUMER groups.

Hopefully, Credit Pros will be regular readers.

After many years of one on one consulting with consumers, I realize that credit has become so complex, the average person can not be expected to study hundreds of hours and learn how credit and scoring work.

Unfortunately, most credit repair outfits are as clueless as any consumer. I’m appalled by the many credit repair business opportunity scams in my inbox. The emails promise huge profits for people with NO credit expertise whatsoever. Their advertised software is 200% crap. I elaborate at credit software.

I’m hoping to educate Credit Pros through screenshots and maybe even slideshows.

We’ll see how much time I’ll have, but I certainly have intentions.

My next post will be about why it so important to review the credit reports BEFORE giving advice. One of my client’s took the advice I gave him about unrated TU accounts and he passed it on to his fiancee. Not good!

I also want to post the score factors proving that Trans Union still rates AU accounts, despite Fair Isaac claims that authorized user accounts will be ignored for FICO 08 TU scores. As the score factors prove, they are only partially ignored.

However, first I have to get everything working here. Please let me know if you find bad links, typos, etc.